Petrobras, Merck Lead $54 Billion of Company Bond Sales in U.S.

May 17 (Bloomberg) -- Petroleo Brasileiro SA, the Brazilian
state-run oil producer, and drugmaker Merck & Co. led at least
$54 billion of bond sales in the U.S. this week, the most in
more than four months, as relative yields widened.

Petrobras raised $11 billion in the largest dollar-denominated deal by an emerging-market issuer, according to data
compiled by Bloomberg. Whitehouse Station, New Jersey-based
Merck sold $6.5 billion of debt in a six-part offering. Sales
rose from last week’s $45.6 billion and compare with an average
of $29.5 billion during the past 12 months.

Even as sales rose to the most since $57 billion of debt
in the five days ended Jan. 11, the extra yield investors demand
to own U.S. corporate bonds rather than government debentures
widened 3 basis points from May 10 to 204 basis points, according
to Bloomberg data and a Bank of America Merrill Lynch index. Yields
decreased to 3.42 percent from 3.44 percent, and compare with a
record low 3.35 percent on May 2, index data show.

Petrobras sold $1.25 billion of 2 percent, three-year
fixed-rate notes to yield 175 basis points more than Treasuries
and $2 billion of 3 percent, debt due January 2019 at a relative
yield of 230 basis points, Bloomberg data show.

The biggest producer of oil in waters deeper than 1,000
feet (305 meters) paid 260 basis points more than Treasuries on
$3.5 billion of 4.375 percent, 10-year bonds and 265 basis
points more on $1.75 billion of 5.625 percent, 30-year
securities, Bloomberg data show. The Rio de Janeiro-based
company also sold floating-rate notes, pricing $1 billion of
three-year debt at 162 basis points more than the three-month
London interbank offered rate and $1.5 billion of securities
maturing in January 2019 at 214 basis points more than Libor,
Bloomberg data show.

Merck Offering

The biggest slice of Merck’s issue was for $1.75 billion of
2.8 percent, 10-year notes at an 87 basis-point spread,
Bloomberg data show. The company issued $1 billion of 0.7
percent, three-year debt priced at 32 basis points and $500
million of three-year, floating-rate notes at 19 basis points
more than Libor, the rate at which banks say they can borrow in
dollars from each other.

Merck also sold $1 billion of five-year, floating notes at
36 basis points more than Libor, an equal portion of 1.3
percent, five-year securities at 52 basis points more than
benchmarks, and $1.25 billion of 4.15 percent, 30-year
debentures at 102, Bloomberg data show.

Issuers planning sales include Pacific Drilling SA with a
$750 million offering and Millicom International Cellular SA
with a $500 million deal, Bloomberg data show.